“The market today is another great example of where it just seems to be over the fiscal-cliff drama between the Republicans and the Democrats; the opening offers from both sides have been discounted,” said Jeffrey Kleintop, chief market strategist at LPL Financial in Boston.

“All the letters and proposals are more for public consumption than actual negotiating purposes,” he added, referring to the back-and-forth between the White House and Republicans.

Extending losses into a second session, the Dow Jones Industrial Average
DJIA, -0.32%
declined 13.82 points, or 0.1%, at 12,951.78. The S&P 500 Index
SPX, -0.23%
lost 2.41 points, or 0.2%, at 1,407.05, with telecommunications leading the losses and industrials faring best among its 10 sectors. The Nasdaq Composite Index
COMP, -0.01%
fell 5.51 points, or 0.2%, at 2,996.68.

Decliners nudged just ahead of advancers on the New York Stock Exchange, where 674 million shares traded. Composite volume topped 3.2 billion.

At odds with what is more typically an inverse trade, commodities including gold and silver fell along with the U.S. dollar. “The dollar’s been going down, which would normally cause gold and silver to go up, at least in dollar terms,” commented Kleintop, adding that the atypical scenario may be related to Asian demand.

Noting that China’s stock market has weakened to its 2008 lows, the strategist said the drop in Chinese equities and dollar-denominated commodities reflects “concern about Chinese demand for precious metals, even though some of the data from China has started to improve lately.”

Moving issues

Netflix Inc.
NFLX, +2.47%
shares jumped 14% after the video-subscription service claimed the rights to show Disney films soon after their theater runs.

Baxter International Inc. slipped 0.9%
BAX, +0.17%
after the medical-equipment maker said it would acquire Sweden’s Gambro AB, a privately held dialysis-product company, for about $4 billion.

Gap Inc.
GPS, +1.19%
declined 10% after the clothing retailer confirmed to Reuters that there had been no change in its dividend-payment policy, dashing expectations raised after other companies made special payouts.

Darden Restaurants Inc.
DRI, -0.05%
fell 9.6% after the owner of Red Lobster and Olive Garden reduced its outlook for the year.

Cliff notes

In an interview with Bloomberg News that aired Tuesday afternoon, President Barack Obama said the latest Republican budget proposal remains “out of balance.”

The exchanges came a day after Republicans offered a plan involving steep cuts in government spending, but did not soften their stance against Obama’s proposal to hike taxes on top earners as part of reducing the nation’s debt. The White House rejected the Republican proposal as having left out higher taxes for the wealthiest 2%.

“The market is holding out some type of hope for a resolution between now and end of the year, but the clock is ticking, and it seems to be running pretty fast now,” said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York.

With four weeks to go before tax hikes and spending reductions automatically kick in, just how the fiscal-cliff issue is resolved is of less importance than getting it done, according to one market participant. Read: Governors getting say on fiscal-cliff talks.

“The country, the economy and the American people just want to move on at this point. Yes, you have extremes of how this should be drawn up, and everybody has an educated opinion, but the general public and the market would agree that it’s an uncertainty issue, and nobody likes uncertainty,” said Chip Cobb, portfolio manager at BMT Asset Management in Bryn Mawr, Pa.

Benefit of a short-term deal?

(5:24)

After White House rejects House Republicans' proposal, hopes remain that Washington can strike a deal to avoid the so-called fiscal cliff. But would a short-term deal do any good?

“The market is clearly telling us there will be some form of resolution; otherwise, the VIX would be picking up dramatically, and we would have seen a bigger pullback than we’ve seen the last few weeks,” added Cobb.

“If we’re still nowhere two weeks from now,” the VIX will rise more dramatically and stocks will do the same in the opposite direction, Kleintop added.

The U.S. dollar
DXY, -0.30%
fell to a six-week low against a basket of currencies and to an almost seven-week low against the euro
EURUSD, +0.4665%
after Greece garnered better-than-anticipated terms for its debt repurchase, bolstering hope that Athens would continue to receive aid and avoid a default.

Gold fell to a four-week low, with the futures contract for February delivery
US:GCG3
shedding $25.30, or 1.5%, to close at $1,695.80 an ounce on the Comex. The cost of oil
US:CLF3
fell 59 cents to settle at $88.50 a barrel.

Treasury prices rose, with the 10-year note yield
US:10_YEAR
down to 1.61%.

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